THE Organisation of Oil Exporting Countries (OPEC) has warned that the enforcement of the extremely low-sulphur fuel use from January 1, 2020 'will be disruptive to both the shipping and refining sectors', reports American Shipper
THE Organisation of Oil Exporting Countries (OPEC) has warned that the enforcement of the extremely low-sulphur fuel use from January 1, 2020 'will be disruptive to both the shipping and refining sectors', reports American Shipper. The decision by the UN's International Maritime Organisation (IMO) to lower the maximum allowed sulphur content for marine fuel from 3.5 per cent to 0.5 per cent will likely lead to shortages of compliant fuel, says OPEC.
'It is hoped that there will be sufficient flexibility in the refining system to avoid any extreme events in the years to come,' said its annual World Oil Outlook journal.
The outlook also is clouded by uncertainty about whether shipowners will comply with the sulphur cap by installing scrubbers to remove sulphur from their engine exhaust or purchase low-sulphur fuel.
Shipowners can opt for LNG, with its negligible sulphur emissions, OPEC said, though LNG 'lacks bunkering infrastructure at a global level'.
The IMO expects the compliance rate will be about 75 per cent in the first year rising to 90 per cent in 2023, in line with the increasing number of vessels with onboard scrubbing facilities.
OPEC said it assumes that installing scrubbing facilities will take off only from 2019, shortly before the IMO decision comes into force and once the financial incentive materialises in the form of a widening discount for high-sulphur fuel oil (HSFO) versus low-sulphur fuel oil (LSFO) that complies with regulations.
In 2020, there will be around 2,000 vessels with installed scrubbers to be followed by an increase to 4,500 - 5,000 scrubbers, OPEC estimates.
